Copper Colonialism British miner Vedanta KCM and the copper loot of Zambia - January 2014 - Foil Vedanta
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Copper Colonialism
British miner Vedanta KCM
and the copper loot of Zambia
January 2014
1
Authors: Samarendra Das and Miriam Rose, Foil Vedanta.
foilvedanta@riseup.net www.foilvedanta.org
Citation: Das, S and Rose, M, January 31st 2014, Copper Colonialism: British miner Vedanta
KCM and the copper loot of Zambia, Foil Vedanta, London.
Creative Commons
With thanks to all those who facilitated our trip to Zambia, and who we connected and shared
with during our time.
This report and our trip were resourced by our own fund-raising efforts, including an Indian
banquet evening and a sponsored song. We are deeply grateful to all those who contributed
small and larger amounts to make this work possible.
Front cover pictures: Vedanta KCM's Nchanga mine, Chingola.
A copper truck leaves Zambia over the Victoria Falls Bridge.
Polluted water in Shimulala village, Chingola.
Vedanta Chairman Anil Agarwal and Zambian President Michael Sata meet in London.
Contents
Introduction: Copper from Cape to Cairo p.3
Chapter 1: Who are Vedanta KCM? p.6
Chapter 2: Copper – the elephant in the room p.10
− The copper elephant
− Making sense of copper material flows
− Opaque profit
− The problem with rent seeking
− The real price of copper
− Material flows – where does the copper go?
Chapter 3: Vedanta's perception management in Zambia p.19
Chapter 4: The truth about Vedanta in Zambia p.21
− Water pollution
− Air pollution
− Workers' rights
Chapter 5: Who owns Zambia? p.26
− Shareholder interests
− Neo-colonialism and the UK Department for International Development
Chapter 6: NGOs and civil society – parasites of the poor? p.30
− In whose interest?
− Whose politics?
− Political influence
− A warning about right wing critiques of aid
Conclusion and recommendations p.34
2
Copper from Cape to Cairo
The question as to who, and what, is responsible for African underdevelopment can be
answered at two levels. Firstly, the answer is that the operation of the imperialist system
bears major responsibility for African economic retardation by draining African wealth and by
making it impossible to develop more rapidly the resources of the continent. Secondly, one
has to deal with those who manipulated the system and those who are either agents or
unwitting accomplices of the said system. The capitalists of Western Europe were the ones
who actively extended their exploitation from inside Europe to cover the whole of Africa. In
recent times, they were joined, and to some extent replaced, by the capitalists from the
United States; and for many years now even the workers of those metropolitan countries
have benefited from the exploitation and underdevelopment of Africa.
Walter Rodney, 1972, 'How Europe Underdeveloped Africa'.
Zambia has been exporting Copper for almost a
century. In 1889 the British South African
Company (BSAC) was given a Royal Charter,
modelled on the East India Company, to exploit
the mineral wealth of Southern Africa for Britain.
The board of BSAC included Sir Cecil Rhodes,
founder of the De Beers Mining Company, and
pioneer colonialist after whom Southern and
Northern Rhodesia (Zimbabwe and Zambia)
were at that time named. Rhodes' signature
project was to link the Cape to Cairo by railway,
allowing minerals and natural resources to be
easily extracted and exported to Europe.
BSAC administered Northern Rhodesia with
paramilitary forces until 1924, when it was
replaced with direct British rule, but continued to
own Zambia's railways until 1947, and their
mineral rights until 1964 when Zambia achieved
independence.
Massive copper deposits were discovered in
Northern Zambia in the 1920's and European
prospectors and industrialists flooded into the Caption: Cecil Rhodes: Cape-Cairo railway
country. Like today's multinational companies, project. Founder of the De Beers Mining
they brought with them administrators, Company, one of the first diamond companies,
Rhodes was also the owner of the British
technicians and skilled labourers, but the life-
South Africa Company, which carved out
threatening job of mining was reserved for Rhodesia for itself. He wanted to "paint the
Africans, who suffered appalling conditions, but map [British] red", and once famously
had to earn an income in order to pay the 'hut declared: "all of these stars... these vast worlds
tax' imposed throughout colonial rule. BSAC has that remain out of reach. If I could, I would
been called a 'parasite' on Northern Rhodesia, annex other planets".
paying very low royalty rates (which were even 10 December 1892 edition of Punch.
tax deductable) and allowing companies to pay
taxes where their headquarters were based (mostly London) rather than in Zambia.1
1 A.D. Roberts, 1982, 'Notes towards a financial history of copper mining in Northern Rhodesia'. Canadian Journal of
African Studies. Vol 16, no 2, 1982: 347-359.
3
In the 1930's and 40's a rising tide of African nationalism led to strikes and protests in the
mines, and the formation of the Northern Rhodesian African Congress – the first African political
party in Zambia - in 1948. As a response to these uprisings, the 1955 Public Order Act was
instated by the British colonial rule, to maintain their administrative and economic power,
ensuring that extractive colonialism was not interrupted. The Act (similar to Section 144 in
India) prevented meetings, protests, and political flags or uniforms, criminalising all forms of
resistance. The Public Order Act remains in Zambian law today, and current President Michael
Sata has been widely criticised for breaking an historical 'selective use' policy, and using the
colonial law extensively to prevent any dissenting gatherings or protests.
Zambia achieved independence in 1964, and joined the IMF in 1965. First President Kenneth
Kaunda nationalised the mining companies and briefly oversaw an economic boom as high
copper prices brought prosperity to the nation. The Intergovernmental Council of Copper
Exporting Countries (CIPEC) was created in Lusaka in 1967 with major copper producing
nations Zaire, Peru and Chile as a copper cartel to increase national revenues from mining. But
CIPEC did not succeed, copper prices fell dramatically in the late 1970's, and Zambia's
sanctions on white-ruled Rhodesia (Zimbabwe) endangered their trade routes for copper
exports to South African ports.
In the 1980's Kaunda was forced to ask for international aid, and in 1983 the first official
Structural Adjustment Programme was imposed by the World Bank and IMF, leading to food
riots, student demonstrations and civil unrest, as government spending was slashed, price
controls were removed and poverty increased. Kaunda's government rejected the World
Bank/IMF's programme briefly in 1987, and saw economic growth return, but were forced to
remove all protective measures again only a year later under pressure from the Paris Club (a
group of rich country leaders) who were withholding bi-lateral aid2.
Since then Zambia has undergone one of the most far reaching liberalisation and privatisation
programmes in Africa, and simultaneously has become poorer and poorer. Today, in a country
half the size of Europe, covered in fertile soils and forests, with a population of only 13 million,
life expectancy is only 37, and 20 percent of the population claim 68.67 percent of the total
income3. A core plank of the World Bank and IMF's conditions was the break up and
privatisation of national mining company ZCCM. They facilitated secret Development
Agreements between the Zambian Government and mining conglomerates, which reduced
royalty rates, environmental regulations, electricity prices, corporate tax and workers' wage and
welfare packages. The agreements are guaranteed for between 15 and 20 years, and can only
be changed via a process akin to changing the national constitution.
Cecil Rhodes' bridge over the Victoria Falls
gorge continues to fulfil its intended purpose, as
trucks and trains carrying copper stream over
the border to Zimbabwe, heading for South
African ports. From there it is allegedly mainly
exported to Switzerland, but only a fraction of it
arrives at its declared destination, suggesting
that the majority is sold on the high seas to
China – the world's biggest importer of the
metal. (More on this in later sections)
A copper truck crosses the Victoria Falls bridge into
Zimbabwe.
2 World Development Movement, 2004, 'Condemned to Debt'.
3 Central Statistical Office of Zambia, 2012, Living Conditions Monitoring Survey report 2006 and 2010.
4
The legacy of extractive colonialism and recent far reaching neo-liberal economic policies
(which can be clearly seen as neo-colonialism), is a Zambian state which has been corrupted,
bankrupted, disenfranchised and dis-informed4. Lack of resources and political conflicts of
interest, alongside a concerted effort by mining companies to hide data and manage
perceptions, leave the Zambian state with virtually no information on the ownership, operations
or production of the mining companies. There is no independent data on the volumes of copper
or other minerals they are producing or exporting, or where it is going. On top of this, weak laws
(negotiated by the World Bank and IMF programmes), and ill-resourced regulatory bodies mean
that tax evasion, fraud, illegal mining, environmental damage and human rights abuses are
rarely penalised even if they are known. Most strikingly, two Chinese managers who shot 13
Zambian workers at Collum mine in October 2010, had charges against them dropped a few
months later5.
Meanwhile agencies such as the Zambia Development Agency (previously the Zambia
Privatisation Agency) continue to advertise Zambia's ongoing achievements in economic
liberalisation in an attempt to attract more Foreign Direct Investment. The 14th Zambia Review,
prepared for the UN World Tourism Organisation 2013 General Assembly in Victoria Falls, to
attract investment from attending delegates, notes that mining companies can enjoy lower
corporate tax rates than other companies (at 30%) and that 57.3 billion Kwacha ($10 million) of
the 2013 budget has been allocated to the development of Multi-facility Economic Zones
(MFEZs) (in which tax and other legal exemptions apply). The review openly states that:
'Investors face no restriction on the amount of interest, profit, dividends, management fees,
technical fees and royalties that they are allowed to repatriate. Income earned by foreign
nationals may also be externalised without difficulty.'6
These kind of policies are leaving Zambia with very little revenue or benefit from the extensive
and rapid mining taking place. The highest unemployment rates are in the Copperbelt and in
the capital Lusaka, at 24.5% and 22.3% respectively7, mostly affecting youth, and prostitution is
the only way of earning for many wives of jobless miners in the region8.
This report uses the best available sources from within and out-with the industry to inform and
widen the debate around copper mining in Zambia, focusing on the activities of Konkola Copper
Mines (KCM), a subsidiary of Vedanta Resources. It aims to expose the interests behind
Vedanta, their environmental and human rights abuses, and their loot of copper and other
minerals from the Zambian people. More generally, we look at who really controls the Zambian
economy and national policies – from international institutions and shareholder patterns, to
donor agencies and NGOs. Due to high levels of opacity (opaqueness) we are missing vital
information such as KCM's annual reports, and accurate figures on copper production and
exports, despite visiting every government and private institution we could in an attempt to find
them. Lacking this crucial information, this report is based on international financial data and
first hand interviews as well as other studies and documents.
4 D. Acemoglu, S. Johnson, and J. Robinson, 2001, 'The Colonial Origins of Comparative
Development', American Economic Review, 91, 1369-1401.
5 Barry Bearak, April 4, 2011, ' Zambia Drops Case of Shooting by Chinese Mine Bosses', New York Times.
6 Zambia Review, 14th Edition, 2013. Ministry of Commerce, Trade and Industry. Directory Publishers of Zambia ltd. p.24.
7 Central Statistical Office of Zambia, 2012, Living Conditions Monitoring Survey report 2006 and 2010.
8 IRIN News, 26th Feb 2009. 'ZAMBIA: Copper-mining downturn sees upturn in sex trade' at http://www.irinnews.org/report/
83161/zambia-copper-mining-downturn-sees-upturn-in-sex-trade
5
Who are Vedanta-KCM?
Vedanta's assets in Zambia: 13.6 Million Tonnes of Copper. From Vedanta presentation on KCM,
2012.
Konkola Copper Mines (KCM) was the largest and most copper rich asset sold off as part of the
break up of national mining company ZCCM. It was originally sold to Anglo American plc for $90
million in 2002, who have been in Zambia since the 1930s, and had been managing the mine
for ZCCM prior to official privatisation. In 2001 they had secured a $81 million loan from the UK
Department for International Development (DfID) to refurbish the Nkana smelter (begging
questions about why the UK's aid budget was being used for private gain)9. But only a few
months after privatisation Anglo American claimed the mine was unprofitable and pulled out
their shares again. This raises stark questions about why and how Anglo acquired the mine.
The former head of Anglo in Zambia, Anderson Mazoka, later claimed it was to 'lock up
resources in Zambia'10, but Mazoka was also sponsored by Anglo to start a political party to
oust President Chiluba, which was unsuccessful and may have led to his poisoning in 2001,11
another potential reason given for Anglo's hasty withdrawal. In reality this is yet another opaque
mystery in Zambia's copper history.
A 51% share in KCM was sold to Vedanta Resources for just $25 million, paid in cash, and $23
million in deferred payments, in 200412. The deal was facilitated by Clifford Chance and
Standard Chartered Bank13 (one of the main bookrunners and lenders to Vedanta Resources).
Within three months Vedanta had already recouperated its initial investment, making $26
million. The banks also helped Vedanta secretly negotiate a call option allowing them the right
9 Freedom of Information Requests to DfID filed by Simon Chase (ACTSA), reported in Aby Diamond et al, 2007,
'Undermining Development: Copper Mining in Zambia', SCIAF, Christian Aid and ACTSA.
10 Khadija Sharife, 2011, 'Copper in Zambia: Charity for multinationals', Pambazuka News, . 2011-06-02, Issue 532
http://pambazuka.org/en/category/features/73742
11 News 24 archives , 26th May 2006, Opposition leader 'poisoned' , http://www.news24.com/Africa/News/Opposition-
leader-poisoned-20060526
12 Andrew Sardanis, 2007, A Venture in Africa: The Challenges of African Business. IB Tauris, London.
13 Zambia Copper Investments, 11th October 2004. 'The recommended introduction of Vedanta Resources plc as a strategic
equity partner in Konkola Copper Mines plc'. Circular to Shareholders.
6
to purchase Zambia Copper Investments' 28.4% share14, which they exercised in November
2005 (a year after their initial purchase), giving them the 79.4% monopoly they currently hold on
KCM, while the Zambian government - via ZCCM-IH (their mining investment wing), own the
remaining 20.6%. The Competition Commission was even rendered irrelevant by the Zambian
government to allow Vedanta such a large majority share15.
Andrew Sardanis, a politically connected businessman in Zambia, details the irregularities of
the sale of KCM to Vedanta in his 2007 book A Venture in Africa: The Challenges of African
Business. On top of the $25 million, Vedanta was to compensate the existing shareholders
(Zambia Copper Investments – a Bermuda [tax haven] based, part Zambian government owned
entity, and ZCCM-IH) for their share losses. But while ZCI received $23.2 million in deferred
payments (for the dilution of its shareholding from 58% to 28.4%), ZCCM-IH was not offered the
corresponding $16.8 million for its share dilution from 42% to 20.6%. Instead, Vedanta made a
deal with the Zambian Government (GRZ) that $16.8 million in debt owed by ZCCM-IH to the
GRZ would be cancelled. Vedanta was supposed to pay this amount to the GRZ, but there is no
evidence that the payment was ever received, or asked for.16
The price negotiated for the buyout of ZCI's remaining shares is not reported, but analysts at
the time valued it between $250 million and $550 million, putting Vedanta's original 51% share
at between $455 and $910 million, nine to eighteen times what Vedanta paid! This means the
Zambian exchequer lost between $155 and $340 million in from the sale of 21.4% of ZCCM-
IH's shares alone. In response, ZCI's 33% French shareholders (grouped into a company called
Sicovam SA) called the deal 'the most outrageous and scandalous ever seen in Africa for
decades'.17
In addition to all this Vedanta was allowed to carry forward all losses incurred 'up to and
including 31 December 2003' – before it even owned shares in KCM. These amounted to
$635,897,000, meaning Vedanta would not have expected to pay tax until the year 2024 at the
market conditions of the time18. In the following years Vedanta made record profits – for
example $301 million in financial year 2006/7 alone19, but very little change was seen in the
Zambian national revenue from this mining boom.
Vedanta abandoned the DfID refurbished Nkana smelter in 2008 and built their own high tech
smelter at Nchanga instead. Construction started on the project in February 2006, but the
Environmental Impact Assessment (EIA) was only submitted in April 2006.20
The pattern of buying massively undervalued state-owned entities, and operating them without
adequate permission is Vedanta's speciality. In Chhattisgarh, India, they bought BALCO's
bauxite refinery, smelter and mines for $89 million in 2001 when it was worth around $800
million21. Vedanta Chairman Anil Agarwal is currently under investigation by the Central Bureau
of Investigations in India over the original disinvestment of 51% of Hindustan Zinc Ltd (HZL) to
Vedanta for only $72 million22, claiming the deal was considerably undervalued, and may have
14 Clifford Chance, Nov 5th 2004, Vedanta Call Option Deed. Leaked and available at
http://minewatchzambia.blogspot.co.uk/
15 Khadija Sharife, 2011, 'Copper in Zambia: Charity for multinationals', Pambazuka News, 2011-06-02, Issue 532
http://pambazuka.org/en/category/features/73742
16 Andrew Sardanis, 2007, A Venture in Africa: The Challenges of African Business. IB Tauris, London.
17 Andrew Sardanis, 2007, A Venture in Africa: The Challenges of African Business. IB Tauris, London. p.247
18 Andrew Sardanis, 2007, A Venture in Africa: The Challenges of African Business. IB Tauris, London.
19 Zambia Copper Investments (2007) Annual Report, 2007 p 1
20 KCM, EIA for the new smelter complex in Nchanga, 2006, cited in Aby Diamond et al, 'Undermining Development:
Copper Mining in Zambia', Oct 2007, SCIAF, Christian Aid and ACTSA.
21 Frontline, 2001, 'Lessons from the Balco fiasco', Volume 18 - Issue 05, Mar. 03 - 16.
http://www.frontline.in/static/html/fl1805/18051090.htm
22 Economic Times of India, Oct 8, 2013. 'CBI to initiate preliminary enquiry into disinvestment of HZL'
7
lost the exchequer hundreds of millions of dollars in revenue23. Vedanta subsidiary Sterlite's
copper smelter in Tuticorin, Tamil Nadu, has been built and expanded without various
permissions. Local activist researcher Nityanand Jayaraman's article Vedanta-Sterlite –
Dangerous by Design24 summarises these illegalities and could be a useful resource for
Zambians to understand the operating patterns of the company which owns the majority of their
copper.
Figure 1: New structure of Vedanta group, from Vedanta investor presentation, June 2013.
KCM is a subsidiary of British FTSE 250 mining company Vedanta Resources. Under a recent
restructuring of Vedanta, KCM is now one of only two major subsidiaries. The other subsidiary
Sesa Sterlite has eight subsidiaries of its own. Sesa Sterlite has been called a 'corporate
rubbish bin' by analysts who suggest its purpose is to soak up debt and risk from loss making
and high debt companies like Vedanta Aluminium and Cairn India (oil)25. One of the reasons
KCM was kept separate from the other subsidiaries is because it is a high earning venture,
making 12.19% of revenue for the Vedanta group in 2012 according to Global Data analyst
reports.26 The re-structuring saved Vedanta $200 million in tax costs.27
Vedanta Resources was a FTSE 100 company until December this year, when their share price
dropped to an all time low of 775p (from a 52 week high of 1,335p). In response Chairman Anil
http://articles.economictimes.indiatimes.com/2013-10-08/news/42829279_1_hzl-sterlite-opportunities-preliminary-enquiry
23 Economic Times of India, Dec 23, 2013. 'Hindustan Zinc Ltd disinvestment: CBI registers PE against Vedanta Chairman
Anil Agarwal'.
24 Nityanand Jayaraman, March 28, 2013. 'Vedanta-Sterlite – Dangerous by Design.', Kafila.
http://kafila.org/2013/03/28/vedanta-sterlite-dangerous-by-design-nityanand-jayaraman/
25 Paul Whitfield, Feb 27, 2012, 'Vedanta reshuffle creates corporate rubbish bin', The Deal. http://www.thedeal.com/content/
restructuring/vedanta-reshuffle-creates-corporate-rubbish-bin.php#ixzz2osuGMZma
26 GlobalData, Vedanta Resources plc (VED) - Financial and Strategic Analysis Review, 18th July 2013.
27 Denise Wee, 19 September 2013, 'Vedanta tackles unwieldy corporate structure'. Finance Asia.
http://www.financeasia.com/News/357556,vedanta-tackles-unwieldy-corporate-structure.aspx
8
Agarwal played his usual trick of buying as many shares as possible – a total of 5.2 million2829,
but it was too late. This leaves Anil Agarwal owning 67% of the company, via his holding
company Volcan Investments Ltd, based in the Bahamas - a UK controlled tax haven. This
means he pays a minimum of tax, in Britain, or anywhere else he operates.
Vedanta, which has operations across India and Africa, has been named 'the world's most
hated mining company' by The Independent newspaper in Britain30, while even the former
Director of the Confederation of British Industries, Richard Lambert, has recently suggested
Vedanta is bringing shame on the FTSE 100 by 'challenging the canons of corporate
governance'31. As Vedanta's share prices crashed this winter, the Business Standard of India
published an article naming people's resistance and environmental issues at their operations,
government regulations, and high debt as Vedanta's major woes affecting their Indian
operations32. People's movements have cropped up in response to illegalities, human rights
abuses, pollution and workers rights issues at almost all of Vedanta's plants. Most strikingly
Vedanta lost $10 billion this summer when it failed to gain permission to mine bauxite in the
Niyamgiri mountains in Odisha, India, due to ten years of resistance by the inhabiting tribal
groups and farmers. Vedanta had built its refinery, and expanded it six fold to 6 million tonnes
per year capacity, before it received permission to mine, so certain was Agarwal that he would
get the bauxite despite the inhabitant's disagreement33,34.
When Vedanta bought KCM they inherited many of the concessions negotiated by Anglo
American in 2000, some of which had even required new legislation or changes to existing
legislation35. These are legalised in Vedanta's secret Development Agreements negotiated by
Clifford Chance with the Zambian Government which are fixed until 2018. These agreements
were leaked to NGO researchers and can be found online36. The deal guarantees them a
royalty rate of only 0.6%, and allows them to deduct 100% of capital allowance from their
investments. The Development Agreements also radically reduced levels of environmental
regulation and environmental liabilities which the mining industry had claimed 'could result in
very large claims'. Vedanta were exempted from tax on dividends, interest, royalties and
management fees. They are also exempt from rural electricity tax37, which is useful for KCM
since they use around 13% of Zambia's electricity. Vedanta KCM are currently searching for
new coal to power a captive plant so that they can avoid a price hike when their agreement
ends38.
28 Jane Tindall, Dec 19th 2013, 'Vedanta share price: Chairman buys 1.7 million shares.' Invezz.
http://invezz.com/news/equities/7703-vedanta-share-price-chairman-buys-1-point-7-million-shares
29 Director Dealings, 24th Dec 2013. 'Vedanta Resources Chairman Buys 35 Million Shares'
http://www.lse.co.uk/AllNews.asp?
code=3t2e441a&headline=DIRECTOR_DEALINGS_Vedanta_Resources_Chairman_Buys_35_Million_Shares
30 Alistair Dawber, 29th July 2010. 'Vedanta Resources: the world's most hated company?', The Independent.
31 Vedanta was described in the British Parliament by MP Lisa Nandy as ‘one of the companies that have been found guilty
of gross violations of human rights’ . Ms Nandy quoted Richard Lambert the former Director General of the CBI: ‘It never
occurred to those of us who helped to launch the FTSE 100 index 27 years ago that one day it would be providing a cloak
of respectability and lots of passive investors for companies that challenge the canons of corporate governance such as
Vedanta…’ http://www.publications.parliament.uk/pa/cm201213/cmhansrd/cm120522/debtext/120522-0002.htm
32 Mansi Taneja & Shine Jacob , Dec 16 th 2013. 'Anil Agarwal's many struggles in India'. Business Standard.
http://www.business-standard.com/article/companies/anil-agarwal-s-many-struggles-in-india-113121601234_1.html
33 Madhusree Mukerjee ,26th August 2013, 'Pristine Tribe Saves Sacred Mountain From Mining', Huffington Post.
http://www.huffingtonpost.com/madhusree-mukerjee/pristine-tribe-saves-sacred_b_3809496.html
34 Saurabh Chaturvedi, Jan 12th 2014, 'India Rejects Plan to Mine Bauxite in Niyamgiri Hills'. Wall Street Journal,
http://online.wsj.com/news/articles/SB10001424052702303819704579316121946926340
35 John Lungu and C Mulenga, 2005. 'Corporate Social Responsibility practices in the extractive industry in Zambia.
36 See http://minewatchzambia.blogspot.co.uk/
37 Clifford Chance. The Government of the Republic of Zambia and Konkola Copper Mines plc. Amended and restated
Development Agreement. Leaked at http://minewatchzambia.blogspot.co.uk/
38 Matthew Hill, Bloomberg News, Jul 17, 2013. 'Vedanta’s Zambian Unit Plans Coal Power Plant to Reduce Costs.'
http://www.bloomberg.com/news/2013-07-17/vedanta-s-zambian-unit-plans-coal-power-plant-to-reduce-costs.html
9
Copper - the elephant in the room
'..The production and sales figures [for copper] announced are indeed impressive but
what puzzled me was the Governor's carefully phrased 'estimate copper export
earnings'. It made me think that these 'earnings' were perhaps never received in the
country and I am asking for clarification. Were the 'estimated export earnings' actually
received or are they likely to be received and when? If not, how much was received and
what happens to the rest? Are the new mining companies allowed to keep them abroad
and if so how do they account for them? Does the Government monitor the foreign
accounts of these companies and does it make sure that the country gets its fair share?
The Nation needs answers to these questions.'
Kenneth Kaunda (Zambia's first President), The Post Zambia newspaper, 2005.
The copper elephant
Zambia produces a sixteenth of the world's copper, at almost 1 million tonnes in 2012
(according to data reported by mining companies to the Bank of Zambia)39. It has the world's
richest copper deposits (alongside Congo), and is the eighth largest copper producing country
in the world40. Copper is Zambia's most important export, making up 75% of its export revenue.
However, despite all this, copper mining only contributes 2% to Zambia's domestic revenue! 41
Why is it that when copper prices are around
$7,300 per tonne, and demand from China is
increasing annually, Zambia is one of the
world's poorest nations with external debts of
32% of GDP? As Kenneth Kaunda, Zambia's
first African President, points out in the quote
above, the profits from mining are gushing out
of the country, and the Zambian Government
and regulatory bodies remain painfully short of
information on where this revenue, or even the
copper itself, is going.
Figure 2: The profit margin on copper is far higher than other
metals. So why aren't Zambians seeing the benefit? (Source:
This dearth of information makes copper Bloomberg, Wood Mackenzie, AllianceBertstein)
the 'elephant in the room' in Zambia. There is no monitoring of production volumes at the
mines, or exports at ports of exit. Instead all figures come from the company's own reporting,
which historical cases show is often deliberately distorted42. Politicians, trade unions,
academics and journalists debate endlessly over the percentage of royalty or windfall tax the
nation should be receiving. But without accurate information on the volumes of extraction or the
profit made by mining companies, how can the Government make an informed decision on
39 Bank of Zambia, Mineral Production and Export, 2012.
40 International Copper Study Group (ICSG), 2012.
41 Lusaka Times, July 22, 2011, 'Mining Sector contributing less than 2% of domestic revenue-ZCTU'.
42 e.g Sherpa versus Mopani, April 2012. Specific Instance regarding Glencore International AG and First Quantum
Minerals Ltd. and their alleged violations of the OECD guidelines for multinational enterprises via the activities of
Mopani Copper Mines Plc. in Zambia.
10mining policy?
We went from pillar to post looking for a copy of Zambia's biggest miner Vedanta-KCM's annual
report, believing the vital figures on production and profit it contains should be public
information. But despite visiting the Central Statistical Office, the Bank of Zambia, the Deputy
Minister of Mines, the Lusaka Stock Exchange, and ZCCM-IH (20.6% shareholder of KCM),
none was available. This section looks at the opaque nature of copper mining in Zambia, and
uses global financial statistics and parallel case studies to examine copper material flows and
financial flows from Zambia, evaluating the potential for the Zambian people to truly profit from
their extensive resource.
Making sense of copper material flows
According to the Central Statistical Office of Zambia (CSO) copper and cobalt products worth
$5.9 billion were exported from the country in 201043, while the Bank of Zambia (BoZ) puts the
value of metal exports in 2010 at $6.07 billion44. In the same year, according to the Government
of Zambia's reports to the Extractive Industries Transparency Initiative (EITI) only $552 million
was received in tax revenue from mining, or $688 million if PAYE (tax deducted from workers'
pay) is included45, a tenth of the estimated value of the exports.
But this is not the whole story. Why are the CSO and BoZ figures so different? The CSO takes
its figures from the mining company's declarations, while the Bank of Zambia uses its own
formulas to estimate production and export volumes. In 2010 CSO report 767,008 tonnes of
copper produced, while BoZ report 852,566 – a difference of 85,000 tonnes. In 2012 CSO
report 721,446 tonnes, and BoZ 824,922 tonnes, a difference of 103,000 tonnes4647. So there is
no clarity within Zambia on the actual levels of production or export of metal.
It is likely that the real figures are considerably higher for several reasons; illegal mining
operations extracting ore under the radar, and deliberate under-declaring of production and
export volumes by companies. Research conducted by the ISS in Zambia in 2010 found the
mining industry extensively affected by theft, corrupt business practices, tax evasion and
smuggling48.
A 2011 detailed investigation into the operations of Mopani Copper Mines (a subsidiary of
Glencore International) by a group of international NGOs 'revealed cobalt extraction rates twice
inferior to other producers of the same area - a difference deemed unlikely by the auditors and
which indicates that some of the ore extracted by Mopani could remain undeclared.'49
It is likely that cobalt, a metal with a value three times higher than copper, is considerably
under-declared. Statutory instrument 89 in Zambian law permits the export of unprocessed ore,
and the export of waste products is also permitted. One financial journalist we spoke to in
43 Central Statistical Office, Traditional Exports 2003 – 2012. Supplied on request to researchers. (The figures are $6.9 bn in
2011 and $6.5 bn in 2012)
44 Caleb Fundanga, Governor of Bank of Zambia, 2011, Macroeconomic trends in relation to the attainment of MDGs. Bank
of Zambia website.
45 Zambia 2010 EITI report.
46 Central Statistical Office, Graph of Total Copper Production 2000-2012.
47 Bank of Zambia, Statistics Fortnightly: fortnight ending Nov 15 2013. Volume 20, no22.
48 A. Mafuleka, 2010, Organised Crime in Southern Africa: the case of Zambia (unpublished report). Subsequently
incorporated into a review of organised crime compiled by A Huebschle, 2010, Organised Crime in Southern Africa: First
Annual Review, Institute for Security Studies pp. 59-61
49 Sherpa versus Mopani, April 2012. Specific Instance regarding Glencore International AG and First Quantum Minerals
Ltd. and their alleged violations of the OECD guidelines for multinational enterprises via the activities of Mopani Copper
Mines Plc. in Zambia.
11Lusaka alleged that cobalt, silver and other minerals are exported undeclared in ores and waste
products. KCM allegedly export waste known as 'slimes', which may contain other minerals for
processing outside Zambia. In India Vedanta's subsidiary Sesa Goa are accused of exporting
150 million tonnes of iron ore from Goa in 2010/11 while only declaring 7.6 million, their agreed
export allowance.50 It would not be unreasonable to assume such a company would be prone to
misdeclaring its exports elsewhere. Revelations about Vedanta's illegal mining in Goa and
Karnataka were originally made after community surveys of numbers of trucks leaving their
mines were carried out. Simple surveys such as this could equally be used in Zambia to
determine the accuracy of company reporting on production and export.5152
Opaque profit
KCM and other mining companies in Zambia don't publish their profits, even though the
Zambian taxpayer has a share in most of them via ZCCM-IH. However Vedanta's 2013 annual
report claims KCM produced 216,000 tonnes of copper in 2013. In the same year costs of
production were valued at 255.1 US cents/lb, putting the total cost of production that year at
$1.2 billion, which would constitute a profit of $362 million (at a current copper price of
$7,300).53
However, Vedanta has declared that they
are making very little profit at KCM,
justifying the retrenchment of 2000
workers which they announced in May
2013, and which KCM vice-president for
human capital David Kaunda, told the
Mine Workers Union of Zambia was due to
"a very unsustainable cost of production"
with high pay rates, and electricity
prices.54 Vedanta regularly cite production
rates of 8 tonnes per employee, but at the
2013 production levels stated in their
annual report, with 18,000 employees, the
Figure 3: Production and costs at Vedanta subsidiaries. real figure would be 12 tonnes/employee.
Adapted from Vedanta's annual report 2013 In fact 11,000 of KCM's employees are
casual or contract labour and may be working part time, as well as for considerably lower pay
than full time labourers55. The 225.1 cents/lb (or $4,962 per tonne) cost of production Vedanta
cite in 2013 is actually not far from the global average of between $3200 and $5000 (according
to one analyst). With copper prices consistently above $7000 per ton this provides a huge profit
margin on copper compared to other metals.56
50 Rajeev Kumar, 15th Nov 2013, 'Vedanta, a major player in Goa’s illegal mining syndicate.', Gulail.
http://gulail.com/vedanta-a-major-player-in-goas-illegal-mining-syndicate/
51 Rediff news, December 08, 2012, 'Detailed report: Story of BRAZEN illegal mining in Goa'.
http://www.rediff.com/news/report/detailed-report-story-of-brazen-illegal-mining-in-goa/20121208.htm
52 Suditpo Mondal, June 17, 2013. 'Karnataka lost Rs 1 lakh cr from 2006-2010', The Hindu. http://www.thehindu.com/news/
national/karnataka/karnataka-lost-rs-1-lakh-cr-from-20062010/article4820758.ece
53 Vedanta Annual Report 2013
54 Misheck Wangwe and Darius Kapembwa, 25 th May 2013, 'Govt rejects KCM's plan to sack 2,000 workers', Zambia Post.
http://www.postzambia.com/post-read_article.php?articleId=33189
55 Christian Aid's report claims that sub-contracted labourers are paid just £37 per month instead of £150 they require for a
living wage. Aby Diamond et al, October 2007, Undermining Development: Copper in Zambia. ACTSA, SCIAF and
Christian Aid.
56 Jonathan Ruff, March 12, 2013. 'Feared Copper “Flood” More Likely a Trickle', AllianceBernstein
http://blog.alliancebernstein.com/index.php/2013/03/12/feared-copper-flood/
12Vedanta's own figures should be treated with suspicion. If they only produce 8 tonne/employee
compared to a global average of 150 tonne/employee, as they have often stated, how are they
still making a $362 million profit? Either they are paying the workers very little, making large
margins on other concessions, or misdeclaring their production. Deputy Minister of Mines
Richard Musukwa suggested to the researchers of this report that Vedanta have been doing a
lot of in-house trading by bringing in Indian companies as contractors.
Analysts reports from Global Data reveal that KCM made 12.19% of revenue for the entire
Vedanta group in 201257 so they are certainly not doing too badly.
The widespread use of 'transfer mis-pricing' means that many mining companies under-declare
their profits within Zambia to reduce tax. Transfer pricing is heavily linked to the use of tax
havens, which is very common among mining conglomerates. For example, mining companies
can sell their copper to a holding company which is one of their own subsidiaries, based in a tax
haven like the British Virgin Islands or the Bahamas, at below market price, recording low or
zero profits in Zambia. The holding company then sells it on to the buyer at a high value,
recording high profits at their holding company, which are barely taxed. A leaked report
authored by Grant Thornton at the request of the Zambia Revenue Agency (ZRA) demonstrated
how the Glencore's Mopani Copper Mines (MCM) used this type of transfer mis-pricing, as well
as overestimated operating costs and underestimated production volumes, to declare no
profits, and cheat Zambia's exchequer out of millions of dollars, while making a fortune.58
A 2010 Economic Commission for Africa report on Tracking and Certification of Mineral Output
in Southern Africa states:
There are also concerns about such practices as transfer pricing by large-scale mining
conglomerates taking advantage of intra-group agreements involving the holding companies
based in low tax jurisdictions and the subsidiaries based in the region. Transfer pricing
abuses take various forms, including over- or under-invoicing of exports and imports,
overloading of costs onto the subsidiary, service contracts and intra-group loans. Through
such agreements, the holding companies are able to transfer income and allocate costs in a
hidden manner that unfairly favours them. These malpractices reduce revenue which would
have accrued to the producing States, thus exacerbating poverty amidst a rich natural
resources heritage – the so-called ‘paradox of plenty!’59
57 GlobalData, Vedanta Resources plc (VED) - Financial and Strategic Analysis Review, 18th July 2013.
58 Grant Thornton, 2010, Pilot audit report – Mopani Copper Mines Plc: International expert team report to the
Commissioner Domestic Taxes, Zambia Revenue Authorities.
59 Economic Commission for Africa, 2010, Tracking and Certification of Mineral Output in Southern Africa. p.vii
13The problem with rent-seeking
Under pressure from the World Bank, IMF and other donors, Zambian authorities have reduced
taxation on mining companies to a minimum to 'attract investment'. The corporate tax rate for
mining companies is set at 30% (compared to 33% for other companies)60, though many mining
companies, such as KCM, have agreed rates of 25%. KCM's agreement allows them to deduct
100% of capital allowance from any investments made – such as prospecting, buildings and
equipment, and losses from bad years may be carried over into good years.61
This is very similar to the agreement for Mopani Copper Mines, and other major miners in
Zambia and can leave the exchequer with virtually no tax revenue at all from companies
making enormous profits. For example KCM declared profits of $301 million in 2006/7 62,
though they extracted $1 billion worth of ore, and only paid royalties of $6.1 million63.
KCM's Development Agreement only requires it to pay 0.6% in royalties, fixed until 2018, and
they have even argued that this is too high64. Royalties are calculated as a percentage of the
market value of minerals 'less the cost of smelting, refining and insurance, handling and
transport from the mining area to the point of export or delivery within Zambia'65, leaving much
room for manipulation of figures by companies. KCM bragged in a presentation to investors that
PAYE (Pay As You Earn) deductions from worker's wages make up nearly 50% of their tax
contributions to the Zambian Government. In the same presentation, in 2007, they note that
they are not paying income tax since they are waiting until 'carry-forward losses are
exhausted.’66 And Vedanta's 2013 Annual Report notes that:
The Group has US$1,263.4 million of unutilised tax losses at KCM (2012: US$1,301.7
million) which expire in the period 2014 to 2022. These unutilised tax losses have been
recognised as a deferred tax asset, as they will unwind as the accelerated capital allowances
unwind, thereby generating economic benefits for the Company.67
As we noted earlier, these losses were inherited from Anglo American, the previous mine
owner.
In an interview with the researchers of this report, Dr Mattheus Mpande, former Deputy Minister
of Mines, and Professor at the University of Zambia, named three problems with Zambia's
mining policies; rent seeking behaviour, labour aristocracy, and populist views. We will refer to
the latter two later in this report, and will look at the former now. Mpande argued, and we agree,
that royalties and taxation should not be seen as the primary method of revenue generation
from copper mining. Instead, he suggested that increasing value addition and 'backward
linkages' in Zambia should be the main focus68. This means raising the value of copper before it
is exported by processing it into coils, pipes, wires etc, after which the product can be sold at a
far higher price.
60 Lusaka Times, July 22, 2011, 'Mining Sector contributing less than 2% of domestic revenue-ZCTU'.
61 Sherpa versus Mopani, April 2012. Specific Instance regarding Glencore International AG and First Quantum Minerals
Ltd. and their alleged violations of the OECD guidelines for multinational enterprises via the activities of Mopani Copper
Mines Plc. in Zambia.
62 Zambia Copper Investments, Annual Report, 2007
63 Banktrack, April 2011, Dodgy deal: Konkola Copper Mines.
64 Zambian Eye, November 10, 2013, Govt reps sitting on KCM board in dark about laying off over 1500 workers – Minister.
http://zambianeye.com/archives/16270
65 Lusaka Times, July 22, 2011, 'Mining Sector contributing less than 2% of domestic revenue-ZCTU'.
66 KCM, a presentation for investors on Vedanta and KCM, 2007; – the presentation states that PAYE totalled up to US$35
million out of a total of US$75-80 million. - quoted in Aby Diamond et al, October 2007, Undermining Development:
Copper in Zambia. ACTSA, SCIAF and Christian Aid.
67 Vedanta Resources, Annual Report 2013
68 Interview with Mattheus Mpande, UNZA, 5th December 2013.
14Figure 4: World's top copper miners (top) versus top copper refiners (bottom) (ICGS).
Beyond that, we suggest
Zambian authorities should re-
examine the concept of royalties
all together, and look at charging
private companies a realistic price
for the ore they extract. Royalty
itself is a colonial concept, which
originally meant 'a percentage of
profit gained from a service
rendered to the state'. The
relevance of royalty was
challenged by Indian courts in
1993-4 during a dispute over low
royalty and other rental rates for
granite mining.69 Major
international campaigns such as
Tax Justice Network and the
Extractive Industries
Transparency Initiative have
played into this 'rent seeking'
ideology, lobbying for minor
increases in tax revenues, and
ignoring more profound issues
around the ownership and
valuation of mineral resources at
the outset.
Zambia did abandon royalty rates
Zambia is the world's eighth largest copper producer, but the in 1966, following independence,
fourteenth largest producer of refined copper. The top refiners of
and introduce an export tax to
copper are rich countries who benefit from the value addition.
reduce the leakage of copper
profits overseas. This helped enable the country's copper boom in the next decade.70 Today
copper prices are again high, with a profit margin of at least $2000 per tonne (difference
between production cost and price of copper – see figure 2) but Zambians are seeing very little
benefit.
The real price of copper
Since private mining companies are not carrying out a 'service' for the state, but rather
extracting resources for their own profit, royalty rates may not be an appropriate form of
resource tax. Instead it would be useful for the Zambian government to evaluate the real value
of its copper and other mineral resources, and consider charging for extraction accordingly. This
means demanding, or independently seeking, information on the real cost of production, and
the real profit attained by companies.
According to KCM's own reports, their assets in Zambia comprise 13.6 million tonnes of
69 Taxes of mines and minerals – Karnataka State at NIC, 18 Aug 1999. www.kar.nic.in/finance/trc/ch08.pdf
70 A.D. Roberts, 1982, 'Notes towards a financial history of copper mining in Northern Rhodesia'. Canadian Journal of
African Studies. Vol 16, no 2, 1982: 347-359.
15copper71. At current rates of $7,300/tonne this would be worth $99 billion. This value belongs to
the Zambian people.
Shortly after taking office this year President Mahama of Ghana stated his dismay about the
meagre returns the country sees from its natural resources. He declared that exports of
unprocessed ore and other resources should be stopped, and value should be added to these
products in Ghana. The Public Accounts Committee also made statements expressing shock at
the volume of earnings from Ghana's gold mines which were kept in foreign offshore
accounts72. Head of Policy Monitoring and Evaluation in the President's office, Dr Tony Aidoo,
made a very profound statement to the press:
Dr Aidoo told the Accra-based Radio Gold that he would rather the minerals remained
untapped in the ground so that local mining techniques, even if primitive, could be employed
to exploit them. If that meant only 5% of the minerals were exploited, he said, it would be far
better for the country than the current situation where Ghanaians themselves did not benefit
from God-given resources73.
The cost of mining to
the Zambian and
Ghanaian economies
goes far beyond loss
of profit from taxation
or export value. The
real price of copper
includes the pollution
of water and air
caused by mining and
transportation, the cost
of decommissioning
mines and smelters,
health effects on local
populations, and the
Figure 5: Externalities of copper production, from De Wit, 2005. depletion of the finite
resource, which will
not be available to future generations. These are known as 'externalities' – real costs which will
be borne by people and governments at present and in the future, but which are not included in
the market price of a resource. Ecological economist Maarten De Wit values the real cost of
copper (including externalities) at $33,000 per tonne, four to five times the current market
price.74 The price is high because copper is one of the most material intense metals to produce
– creating 500 tons of waste, and using 260 tons of water for each ton of primary copper.75
Understanding the real ecological price of copper is important for resource rich states, since
when their resource is depleted, they will continue to pay for the externalities for years to come.
This sort of calculation should be included in the cost benefit analyses when new mines are
proposed or deals struck with companies.
71 Konkola Copper Mines, presentation to investors, November 2012. www.slideshare.net/VedantaGroup/kcmpresentation-
november2012
72 Dr Tony Aidoo, head of policy monitoring and evaluation in President Mahama's office in Femi Akomolafe, December
2013, 'Ghana: Fury over offshore accounts', New African.
73 Dr Tony Aidoo, head of policy monitoring and evaluation in President Mahama's office in Femi Akomolafe, December
2013, 'Ghana: Fury over offshore accounts', New African.
74 Maarten J. de Wit, 2005, 'Valuing copper mined from ore deposits', Ecological Economics, Volume 55, Issue 3, 15
November 2005, Pages 437–443
75 Michael Ritthoff, Holger Rohn, Christa Liedtke. 2002. Calculating MIPS : Resource Productivity of Products and
Services. (Wuppertal Spezial no. 27e) The Wuppertal Institute for Climate, Environment and Energy
16Material flows – where does the copper go?
Perhaps the most stark case of opacity in Zambia's copper story relates to the final destination
of its copper exports. On paper the majority ends up in Switzerland (a major tax haven where
Glencore International is based)76. Figure 6 shows Zambia's main export markets in 2008/9
when the dominance of Switzerland was more striking than today, with the most recent graph
inset. The increase in imports to China can be attributed to the influx of Chinese state owned
mining companies now exporting copper from Zambia.
Figure 6: Direction of Zambia's exports in 2008-9 and 2012-13 (inset)
Figure 7: World copper consumption in 2009 Though Zambia is the world's eighth
biggest copper miner, it doesn't even
register on the list of copper consumers.
China currently consumes 40% of global
copper, and this is predicted to rise to 84%
by 201477. So how can the majority of
Zambia's copper end up in Switzerland?
The obvious truth is that it doesn't. A 2010
Christian Aid report found that in 2008 half
of Zambia's copper exports were destined
for Switzerland as they left Zambian
customs, but the Swiss import authority
claims most of it didn't arrive. The report
also found vast differences between the
Source: ICGS price paid by Swiss agencies for Zambian
copper, and the price attained for exporting
this again from Switzerland. They claim the Zambian Government could have increased its
76 Central Statistical Office, cited from Bank of Zambia, Zambia direction of trade report, Q1 2013. http://www.boz.zm/
%28S%28uc3ksc55shnjfl455srhrlv4%29%29/GeneralContent.aspx?site=69
77 Standard Bank, February 21, 2012, An Analysis of China’s Copper Demand.
17revenue from mining six times if these prices had been realised in Zambia78. (see figure 8)
Figure 8 Difference between copper export prices in
Copper leaves Zambia on trucks and trains Zambia and Switzerland.
bound for ports in Dar es Salaam
(Tanzania) or South Africa, but very little is
known by the Zambian authority about what
happens next. The Bank of Zambia notes its
lack of information when it states:
Large metal traders (e.g. Glencore
International AG), headquartered in
Switzerland, purchase copper and cobalt
from Zambian mining companies off gate
and sell the commodity to other foreign
markets. Most Zambian companies are
not fully aware of the final destination of
the copper purchased by these
companies. 79
Selling 'off gate' means that the cost of, and
responsibility for, freight is picked up by the
buyer. So where do KCM's exports go and
what is their real value? In an affidavit to the
Zambian High Court (as part of a court
battle over tax owed) in November this year,
KCM claimed it sells its copper cathode
exports to traders including Traxys SA, Marubeni Corp and Ambrian Metals Ltd., and is not
privy to who the final buyers are or where they are located.80
The fact is that most metal is traded on the high seas – a colonial tradition which is almost
totally de-regulated, and unaccountable81. For example the contribution of shipping to pollution
and climate change has only recently been established when it was revealed that sixteen mega
ships alone produce the same amount of sulphur as all the world's cars. Global shipping is
overseen by the International Maritime Organisation (IMO), a key United Nations body based in
London, which has refused to take part in carbon reduction and other regulatory programmes.82
78 Christian Aid, May 2010, Blowing the Whistle: The time's up for financial secrecy.
79 Bank of Zambia, Direction of Trade report, Q1 2013.
80 Matthew Hill, Nov 6 2013, 'Vedanta’s Zambia Unit Sues Tax Authority Over $586 Million Bill', Bloomberg.
http://www.bloomberg.com/news/2013-11-06/vedanta-s-zambia-unit-sues-tax-authority-over-586-million-bill.html
81 Sletmo, G.K, 2001, 'The End of National Shipping Policy? A Historical Perspective on Shipping Policy in a Global
Economy', International Journal of Maritime Economics, Volume 3, Number 4, 1 December 2001 , pp. 333-350(18).
82 Fred Pearce, 21 November 2009. 'How 16 ships create as much pollution as all the cars in the world'. The Daily Mail
newspaper.
18Vedanta's perception management in Zambia:
Like other places where they operate in India, Vedanta have put considerable emphasis on
Public Relations (PR) since acquiring KCM in Zambia. PR is used to emphasise and
exaggerate their Corporate Social Responsibility (CSR) programmes, and create positive
perceptions of the company for politicians, investors and community members. However,
behind the shiny images of happy African children, Vedanta's rhetoric of alleviating poverty
through mining is usually very hollow. The reality for communities around Vedanta's operations
around the world, and in Zambia, is far from positive, as pollution, workers rights violations and
tax evasion leave little local benefit.
Shortly after acquiring KCM Vedanta employed 'image builder' Augustine Seyuba – a former
journalist, to create confidence in the company locally. They sponsored the Zambian super-
league and took on several local clinics and schools previously run by ZCCM and Anglo
American, and promoted these developments in newspaper adverts and billboards. However
they did not promote the fact that they also gave back one of the hospitals previously run by
Anglo to the government, and that, according to a local activist - 'the standards of health care
and service delivery have drastically dropped with chronic shortages of even basic medication
where even clients are compelled to buy some of the medicines from drug stores in town'83.
Another report notes that: 'in a speech to officially launch the football league sponsorship, and
in the presence of the Republican President, the KCM Chief Executive Officer (CEO) could not
hide the intentions of the company when he asked the government to extend the tax
holiday/exemptions the company has been enjoying ever since KCM was set up (2000).'84
Augustine Seyuba is now Permanent Secretary in Zambia's North Western province, an
upcoming mining area, showing the dangerous and common revolving door from journalism to
PR to politics. KCM's current PR head - Joy Sata, is another former journalist, and their head of
Communications – Shapi Shacinda, is a former Reuters correspondent.
In India Vedanta has come under attack for its misleading
PR campaigns. A major national campaign in India called
'mining happiness' had to be scrapped after celebrity
participants pulled out due to concerns about Vedanta's
ethics. Activists formed a parallel campaign called 'faking
happiness' which pointed out the truth about Vedanta's
mining practices such as land grabbing, toxic waste
dumping and harassment of villagers who opposed their
projects85.
Vedanta are currently running another major PR campaign
in India called 'Our Girls, Our Pride' which paints them as
women's rights advocates. This has also been opposed by
women's groups who have called it a sham, noting the many
women and girls made homeless, fatherless and destitute
Anil Agarwal tries to paint himself as by Vedanta, as well as those who have led social
one of India's top philanthropists. movements against their operations86.
83 Email from Vincent Lengwe, Director of Copperbelt Trade and Development Forum, Luanshya. 6th January 2013.
84 John Lungu and C Mulenga, 2005. 'Corporate Social Responsibility practices in the extractive industry in Zambia.
85 Faking happiness campaign. http://fakinghappinesscampaign.blogspot.co.uk/
86 http://www.kractivist.org/open-letter-to-priyanka-chopra-on-ndtv-vedanta-our-girls-our-pride-campaign-vaw/ and
http://www.foilvedanta.org/articles/1275/
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